Get Rid of your checking account: => http://www.loanacceleration.net

New Loan Features Can Save Home Owners Hundreds and Thousands of Dollars Without Spending One Penny In Extra Payments

Everyone is always looking to save money one way or another. This is especially true with their biggest bill of all, the house payment.

But is there a way to do this without having to cut back on the things that they really like to do? For some homeowners it is a reality and the savings are, quite frankly, nothing short of amazing. The simplicity of this plan is laughable, and, at the same time, a stroke of genius. Here it is: "Replace The Checking Account with A Home Equity Line Of Credit and It Will Save A Ton of Money."

That is pretty much it, but let's breaks it down a bit more. A Home Equity Line Of Credit (HELOC) has 2 unique features that no other home loan offers that make this possible. They are:

1. It is a Revolving Account- Just like a checking account or a credit card. That means money can be deposited and withdrawn when needed. That is why the lender issues a debit card and checks when someone opens a HELOC.

2. Interest Compounds Daily Instead Of Monthly- While this may sound like a negative, it is really a benefit. Here is an example: Say you just got paid at work. Go to the bank and deposit the check, but deposit it into the HELOC instead of the checking account. Go to the store to buy some groceries. Pay them with a debit card or checks, but use the one from the HELOC instead of the checking account.

Here is how money is saved with this program:

Remember how the interest compounds daily? Go grab a bank statement from the checking account. See where it says "Average Daily Balance." That means with all of the deposits and withdrawals, this is the average amount in the account.

Put this money into a HELOC it will lower the balance of the loan, thus lowering the payment. Because it compounds daily, it does not matter if deposits and withdrawals happen all of the time. Any amount deposited into the HELOC above the basic interest goes 100% to lowering the principal balance. Let's work with some hard number and see it in action.

Take a $150,000 HELOC at 8%. This would make the full payment $1,100, with $1,000 of that going toward interest. A whopping $100 goes toward principal. The average daily balance in the checking account is $10,000.

Deposit the $10,000 into a HELOC, making the balance $140,000. That would lower the interest part of the payment from $1,000 to $933, a savings of $67. Of the $1,100 payment, $167 goes toward principal instead of $100. That might not sound like much, unless it is put in these terms:

This will save $132,000 in interest on a $150,000 loan This would shave a full 10 years off the loan. It would be paid off in 20 years instead of 30. That is 120 less payments of $1,100 per month. A lot of savings for the average homeowner.

Conclusion:
After reviewing the facts features and claims in regards to this loan program, I can honestly say it is one of the only ways of saving a lot of money without having to scrape money together and go on a stricter budget.

About the Author:

With Over $100,000,000 in Home Loans Funded per Year, Nick Krehnke, is truly an "Expert's Expert" in the area of Home Finance and Investing. He is also the author of "How to Retire Rich with Real Estate, By Owning Just One Home" Get a Free Custom Report from his website at http://www.home-loans-by-nick.com/

Posted by Keith Gill on 02/16/2007 01:25 PM

checking account, heloc, home equity lines of credit, mortgage, interest, credit

17 Comments on Wanna pay off your Mortgage?...Get rid of your checking account...!

FEB

2007

Wow - never really thought about it - this will be an interesting week - heading out to check it out for my own home.... thanks

FEB

2007

That's a great idea, Keith. I'm going to share this with my customers, family, and friends. I've got a few in mind who I'm betting will love this one.

Facinating idea. I am going to read this again when I am not tired. My initial concern is that people would abuse this and then be left with no checking account, and no equity because they used the HELOC for junk. But then again, maybe I am misunderstanding. I can't wait to read this again with a fresh mind. Thank you.

The thiing really works! I looked at the numbers and they don't lie.

My first impression is that this seems dangerous for the average person. It is an interesting approach and I do intend to research it further. Thanks for your post.

FEB

2007

Sounds good Kieth. One question that comes up initially that banks will not give you that kind of money for a home equity loan and the interest can change year to year. Is there a way to lock the interest for a home equity loan Thanks

FEB

2007

I think this is a viable alternative for some folks but not everyone. If you're disciplined enough not to make any unnecessary purchases because the money is there and keep your balance under control, you would be okay.

But when Bubba wants that new 60" Plasma tv and a swimming pool for his double wide when he doesnt need it but "has the money", it could be a very bad thing.... A heloc is not a credit card... you're tying up your home...

Oops... it might be hard getting a heloc on a doublewide.... :-)

Carl

Hi! and very interesting article - but I'd like to play devil's advocate for a minute:

Although it sounds really good, and could save money in the long run if you're planning on really living in your home for 20 or 30 years (who does that nowadays?) - but what happens when you move? and your new home won't qualify for a heloc right away cuz there's no equity? just live without a checking account until you build up equity?

Did I miss something? Please help - I'm trying to learn about HELOC's.

Hi Laurie, ther would only be "NO Equity" if you did 100% financing and did not use any of the proceeds from the sale of your previous home. Of course if you have NO equity than this method would be a moot point whether it was a home you just moved in or lived in for 20 years....You have to have at least some Equity at least enough to get a $10,000.00 HELOC...Thats all it takes...

I suggest you go through the video to see a visual representation:=> http://www.LoanAcceleration.net

Keith

Hi this is For David:

"Sounds good Kieth. One question that comes up initially that banks will not give you that kind of money for a home equity loan and the interest can change year to year. Is there a way to lock the interest for a home equity loan Thanks"

Most all HELOCS are tied to Prime (currently 8.25%) are variable (adjust when prime adjusts) ,are open ended lines of credit (payment is based upon oustanding balance not full line amount) and are only liable to have the interest payment made every month...

What makes this sort of interest canellation work is the open ended line of credit where the payment is based on outstanding balance that is inherent in the HELOC. When you lock the interest rate usually these lines become a closed ended fully amortized second which totally defeats the purpose of being able to use the interests cancellation feature that a HELOC has.

If you can find a bank that offeres an open ended line of credit type of HELOC which will lock the interest rate while keeping it open ended then please let me know about it...Unfortunately most all HELOCS are tied to prime and will adjust as prime adjusts...

There are some hybird type of HELOCS that will automatically turn into a fixed fully amortized second loan after 5 years or so where the payments will be based on the outstanding balance, but I think these type of Hybirds kind of defeat the purpose of a HELOC in the first place....

Keith

AUG

2007

GREAT DAY, I AM INERESTED TO DEPOSIT A LOAN IN A EQUITY HOME LINE OF CREDITCan you kindly try to open A EQUITY HOME LINE OF CREDIT or look for
some one who can help ME in UNITED STATES to open it.THANK YOU

Keith, did you point out that this loan interest is tied to the LIBOR?? I have heard about this loan about 6 months but to scared to take the plunge with using it. It scares me to death, because we are always told 30 year fixed...

OCT

2007

Hi All,

I am the author of that article that Keith is using to sell his software. That's OK, becuase thousands of people have done the same.

Let me clear up a few things.

for Laurie--You it doesn't matter if you don't have equity in your house. You can do a 100% purchase with a HELOC, either as 1 loan or an 80-20. You can even do a refi to 100% if needed. Once you have the HELOC in place, you just use it like your checking account. It's that simple. You also don't need to own the house for a long time to save money; you save money immediately.

for Carl--you can't make people be responsible with there money or not. But even Bubba will save money. It's just a mathmatical fact.

for David--You can lock the drawn portion of a HELOC with some banks, however that portion loses it's revolving feature, which is essential for this program to work. FYI, prime just dropped from 8.25 to 7.75. Sometimes an adjustable rate is an advantage when rates are falling.

This is the only way I know of that will REALLY pay off a mortgage faster without extra payments. There are a few more advanced techniques that will accerate the payoff much quicker, but you will have to message me for that :)

---Nick

OCT

2007

First:

Do I understand the concept?

I already have a mortgage. I will need to obtain a HELOC (a line of credit that is not hard money, the amount doesn't seem to be of great consequence?). With the first paycheck I receive after opening the HELOC, I pay 100% of that amount towards my mortgage, which would satisfy the 'required payment,' as well as pay down principle. During the remainder of the month, I use draws on the HELOC to get by...gas, food, clothing, day-care, movie tickets, etc. When the next monthly paycheck arrives, I use 100% of that amount to 'pay' back the HELOC. Then, I use a HELOC draw to pay an equal amount of my paycheck to my mortgage. The next month rolls around and the process continues.

Second:

Things that confuse me are...what happens when you 'over-spend': i.e.-medical bills, vacations, etc? I don't see room in this concept to save money. Is the concept that you use the HELOC as a savings for those events and you pay back the HELOC versus paying the full amount of a paycheck to the mortgage?

Third:

Is there ever a time you would have POSTIVE amounts in the HELOC instead of draws? In my scenario above, I mentioned the first monthly paycheck would go to the mortgage, I but I am wondering if I am supposed to pay that paycheck amount to the HELOC, even though I had not even taken a draw yet (potentially negating the daily average balance owed.) and then pay the mortgage from the HELOC.

Fourth:

I should mention, I am not a big spender and I think I may be an ideal candidate for this program, as I already have a World Savings (Wachovia) Bi-weekly Equity Builder, I carry no revolving debt, and I track my finances and spending on a daily basis via Quicken downloads. What I don't currently have at the moment, is a great deal of EXTRA money remaining from each paycheck to the next one?

To CP:

First: Yes. You use it just like your current checking account.

Second: What happens if you "overspend" in your current situation? It is no different than you would currently handle things, except you are saving money by having it parked in your HELOC instead of a checking account. I would use your credit cards to pay your bills durning the month and just pay the credit card bills off from your HELOC. You pay zero interest on the credit cards as long as you pay it off before the due date. This would also help you save more on the HELOC because you would have more money parked there for a longer period of time, hence lowering your average daily balance.

Third: No. It is a loan that works like a checking account, but it is not a checking acccount in the terms of having a positive balance.

Forth: I assume you have an option arm with Wachovia? If so, you would be limited by the number of banks that allow a 2nd behing a neg am 1st. There are still some that do, just not too many.Are you still in a pre pay penalty period?

Give me a call at 253-381-0935 and maybe I can help.

DEC

Hello Keith,

Many customers are not able to get a home equity loan these days. United First Financial charges a fee for their software and you dont need a home equity loan anymore. A customer just need a checking and saving account with a few hundred in the account and the software will help the borrower pay off the mortgage along with all other credit card debts or loans in a fraction of time.

When a borrower has a loan for 200,000 with 6% interest rate, you pay $1199 a month and for 30 years she/he pays $431,640. i did two calculations with this. I went to a calculator in google and said borrowers is paying 34.72 a month extra each month ($25.00 more each month extra and $3500 fee = $12,500 or $34.72 a month for 360 months) . paying extra $34.72 will save you 2 years 2 months or $20,203.71 and following United first Financial program MMA with same scenario you will pay off the mortgage saving 8.1 year with a toal saving of $64,829.89.

I would be happy to discuss this furthe

APR

Hi Keith,

I have been researching this, and I keep hearing that it has to be a specialized HELOC.

What kind of HELOC do I need?

I want to try this on something small first to see if it works.

I am looking at paying off some credit card debt, so it will be a $10,000 HELOC.

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